STZ - Embedded Expectations Analysis - 2018 07 30
Constellation Brands, Inc. (STZ:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 31.9x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management is concerned about trends in the beverage markets they service, and about retail's acceptance of their brand portfolioSpecifically, management is concerned about weather-related impacts on their beer business, and their ability to benefit from tailwinds related to the approaching Fourth of July holiday. Additionally, they may lack confidence in their Pacifico brand and the launch of their Spanish TV campaign. Furthermore, they may be concerned about trends in craft spirits, barrel-aged beverage and cannabis markets. They may also lack confidence in expectations for retailors getting behind their brand portfolio, and about inventory issues that led to them running out of their Meiomi wine. Also, they may lack confidence in their ability to maintain ACV (all commodity volume) performance, and their ability to grow net sales and operating income.
Constellation Brands is an international beverage alcohol company. The company is a producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. The company has two segments: Beer, in which the company is engaged in the U.S. beer market that includes the imported, craft, domestic super premium, and alternative beverage alcohol categories and it has the right to import, market and sell these Mexican beer brands in the U.S.; and Wine and Spirits, in which its wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S., New Zealand and Chile, and vineyard holdings in the U.S., New Zealand and Italy.
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